New Model for a New Day at Print House

Can the former president of Revlon North America save The Color Wheel?

Arne Zimmerman has turned companies around before. Now, as chairman of the beleaguered print production house, which was the focus of a federal investigation last year, he’s starting with a total makeover: a new name, new systems and a new financial model that includes employee ownership.

Zimmerman and his partner, Frank Suozzi, took majority ownership of the company last week from founder Haluk Ergulec and renamed it 291 Digital. Suozzi will serve as CEO. One of Zimmerman’s first moves was to give the 180 employees co-ownership. “The senior management will receive preferred stock, and the employees will be issued common stock, so we’re all in it together,” Zimmerman, 58, said.

Also, a new billing system lets clients track costs of projects. “Transparency is a key word these days, and it’s part of our bid to win back the trust of the agencies,” he said.

Last fall, Ergulec pleaded guilty to charges related to bid rigging, creating phony invoices, kickbacks and tax evasion that involved dealings with print executives at Grey Advertising. Ergulec is scheduled to be sentenced March 4 and could get roughly three years in prison, sources said.

Anyone named in the indictments has been shown the door, Zimmerman said, and potential hires will be subject to rigorous background checks. However, many long-term employees remain, including Mark Wenger, Michael LaRaia and Pat Citera, who were promoted to president, COO and CFO, respectively, after Ergulec stepped down last fall.

Zimmerman and Suozzi most recently ran AM Products Co., a small New York cosmetics firm. They led a fiscal makeover there, initiating layoffs, reorganizing the marketing plan and restructuring the finances.

Zimmerman previously spent five years leading Revlon North America. And before that he worked at L’Oréal as president of the retail hair division and a member of the executive board.

“Arne is one of the most dedicated executives I worked with in my 36 years at Revlon,” said Jay Bennett, a former board director and head of human resources at the company. “He was known for working 18-hour days and for increasing revenue on every cosmetic line he worked on.”

About five agencies and 40 marketing companies have signed back on with Color Wheel since the new management arrived, Zimmerman said. But he declined to name them.

In addition to Ergulec, Mitch Mossallem, former director of print services at Grey, Birj Deckmejian, a former Color Wheel salesman, John Ghianni, a former salesman for Quality House of Graphics, a New York print supplier, and Color Wheel itself were charged with fraud, conspiracy and tax evasion. Ergulec’s plea removes Color Wheel from any further prosecution connected to this case. The trial of the remaining defendants is due to begin April 14, but could be delayed until September, sources said.

One executive whose company worked with Color Wheel before the scandals said, “The name change helps. Once the trials end, things should be smoother for them.”

Zimmerman said the company earned as much as $60 million annually before the investigation. Sources said it is less than half that now.